1. Field
The present invention relates generally to pricing systems and, in particular, to a system and method of real-time pricing.
2. Description of the Related Art
Many products and services are commodities that are sold in very competitive markets. New competition can also come, for example, from product and service improvements, new products, new services, lower prices, new technology, the use of the Internet, mergers, and acquisitions. Pricing is often a major factor in a customer's decision as to what product or service to purchase or use. In many markets, the capability to manage pricing strategies better than the competition can be the competitive advantage that is needed to succeed in the competitive market.
Many different pricing strategies have been developed by companies to gain a competitive advantage over the competition. One such strategy employed by companies is “volume discounting.” Companies provide volume discounts to influence consumers to purchase its products and services. Volume discounting affords the benefits of a large number or quantity of purchases, typically within a set period of time (e.g., a billing cycle). A consumer benefits from his or her prior purchases in that all the purchases in a billing cycle are considered in applying the volume discount.
Because the total volume of products or services purchased by a consumer is not known until the end of a billing cycle, the volume discount, and as a result, the actual price of the product or service as it applies to the consumer, cannot be determined until the end of a billing cycle. Thus, even though pricing may be a major or deciding factor in a consumer's decision, currently, the benefit afforded by volume discounting is determined at the end of a billing cycle. At the time the consumer considers making a product or service purchase, the consumer is provided a price that fails to account for volume discounting and, as a result, is likely higher than the price the consumer might end up paying.
Thus, the consumer is likely to base his or her purchasing decision on an incorrect price, such as, by way of example, a unit price (e.g., a price that does not take into consideration volume discounting). A company can benefit greatly by being able to provide a price that is closer to the actual price the consumer is likely to pay after accounting for the volume discounts, especially if it is a lower price. Therefore, what is needed is an infrastructure that enables a company to manage its pricing strategies and to provide a price that is more indicative of the price the consumer will ultimately pay.